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Who should pay for social care ?

hifinutt said:
wow Bob . thats expensive , we had an AMAZING nursing home in worcestershire overlooking beautiful countryside and it was 1056 a week ! we thought that was bad , but it was worth every penny . i was surprised that because it was self funded we could keep the higher rate attendance allowance which helped with costs slightly
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£1500 a week gets you nowt special in West Suffolk
 
Blimey when my mother in law was in a nursing home 7 years ago up to her death it cost more than £1200 a week.
You won’t get anything less than £1600 round here in Cheshire.
 
PhilofCas said:
Less divide between the rich and the poor, a properly funded NHS, tax dodgers stopped etc etc.
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Thing is, these numbers are just colossal. IIRC, you need to earn circa £50K a year to be a net financial contributor in UK. Below that and someone else is funding you on a macro level. I know we could spend months arguing about that figure but just accept it for a moment. If you earn £50K a year, you pay £12,350 a year in tax and NI. A year in Bob’s Cheshire care home is nearly 7 years of tax and NI contributions of a £50K salary. Let alone all the other public services which need to be paid for. I just can’t see how we can square the circle. Sure, go after tax dodgers but it’ll be a rounding error in the scale and size of the problem.
 
Good article laying out in stark terms just what a demented business model is involved here - and how Johnson’s reforms are liable to tip the sector into crisis:

https://blogs.lse.ac.uk/politicsandpolicy/social-care-reforms-2021/

But even with the cross-subsidisation from private payers the prospects of the UK care home industry remain on a precipice. Our forthcoming analysis of the financial accounts of over 4000 care home companies which provide care to older people reveals a sector which is loss-making, highly indebted, and often lacking in sufficient cash to make ends meet each year. Thus, prior to the pandemic we found that 27% of the care home companies operating a third of all the care home beds in the UK made a loss. In addition, 15% all the care home beds were operated by companies with negative net worth – i.e. the company which operated these beds had total long-term liabilities (debts) greater than their total assets, whilst 70% of all care home beds in the UK were operated by companies with high levels of debt (i.e. they had a gearing ratio of greater than 50%), and 42% of care home companies had insufficient short-term assets to meet their liabilities in one year. As a result, one in four care home companies were assessed as being likely to experience financial failure within a year.

In addition to low levels of state funding, the business models of a significant proportion of the sector further imperil the survival of many of the UK’s care homes. The large for-profit care home companies in particular have been shown to extract significant parts of their residents weekly fees to pay off debts, meet rental obligations, pay management fees and issue dividends and profits, thus diverting money from frontline care and making them highly vulnerable to any small increase in costs. And whilst little is knownabout the finances of the family-run small and micro businesses – which own and operate hundreds of small homes – our research shows that they too are struggling to keep going, with 44% of them having negative working capital.
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Ponty said:
Thing is, these numbers are just colossal. IIRC, you need to earn circa £50K a year to be a net financial contributor in UK. Below that and someone else is funding you on a macro level. I know we could spend months arguing about that figure but just accept it for a moment. If you earn £50K a year, you pay £12,350 a year in tax and NI. A year in Bob’s Cheshire care home is nearly 7 years of tax and NI contributions of a £50K salary. Let alone all the other public services which need to be paid for. I just can’t see how we can square the circle. Sure, go after tax dodgers but it’ll be a rounding error in the scale and size of the problem.
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Meaning what, us plebs earning less than £50k are scroungers?
 
Ponty said:
Thing is, these numbers are just colossal. IIRC, you need to earn circa £50K a year to be a net financial contributor in UK. Below that and someone else is funding you on a macro level. I know we could spend months arguing about that figure but just accept it for a moment. If you earn £50K a year, you pay £12,350 a year in tax and NI. A year in Bob’s Cheshire care home is nearly 7 years of tax and NI contributions of a £50K salary.
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The key fact is that care requirements are unevenly distributed. Only about 1 in 10 over-65s need more than £100k of care. Most don't need anything like that. And that means that the average per person cost is NOT unaffordable. It is around £20k lifetime care costs.

As Andrew Dilnot says in this article, which supports the figures above, “There’s plenty of money...GDP in real terms is more than 5.5 times as big as it was in 1948. So if anyone says to you, we can’t afford X, Y or Z, the appropriate response is: ‘That is not a well-formed formula”.
 
mandryka said:
But people pay more tax than tax on earned income - flat taxes, capital gains, estate taxes. The key to solving the problem may be in those estate taxes.
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Of course we do, but there are a hell of a lot more services to pay for than care homes! An ageing population will just compound the problem.
 
laughingboy said:
The key fact is that care requirements are unevenly distributed. Only about 1 in 10 over-65s need more than £100k of care. Most don't need anything like that. And that means that the average per person cost is NOT unaffordable. It is around £20k lifetime care costs.

As Andrew Dilnot says in this article, which supports the figures above, “There’s plenty of money...GDP in real terms is more than 5.5 times as big as it was in 1948. So if anyone says to you, we can’t afford X, Y or Z, the appropriate response is: ‘That is not a well-formed formula”.
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I suspect those numbers are higher now but yes, the range in cost of care required will be significant. It has to be an NHS model really. Free at the point of use. We’re just going to have to pay more tax to fund it.
 
Ponty said:
Below that and someone else is funding you on a macro level.
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No they are not! This fundamentally flawed approach is the root cause of people thinking of themselves as 'paying for' other people who 'only receive'. They are only paying their own levied tax and it ends there.

The concept of NI and tax somehow being 'paid in' and stored as a surplus for (later) re-use is completely misleading. This is not how funds flow. When these taxes are levied they are just debited and accounted for in the flow of funds. They don't 'go' anywhere, they are a separate operation related to maintaining the level of spending/taxing for maintaining the level of employment (as full as possible is the goal) to be neither inflationary or deflationary. Which is a mechanism for transferring goods and services, via economic activity, from the private to the public domain so that a government can meet its mandate to furnish society with public needs/goods/services. It is mobilisation of resources and scorekeeping of activity, not money recycling.

The core problem is ideologically-based political policy. UK government (and others worldwide) prefer to stick to the misguided notion, wilfully or because they know no better, that public goods are funded financially by the public and specifically holders of excess unspent income. They are not. The goods and services, in this case healthcare, are provided by the public and these are financed by NEW MONEY spending, budgeted alongside the tax regime, not from it. The ideological commitment to certain views causes the government to artificially constrain its spending capabilities. These are choices. As is the choice to raise retirement ages to artificially reduce age dependency rates, but how far do you go with that? To age 90? To death?

So there are multiple factors to consider. Yes, progressive tax increases may be necessary, but also proper organisation and utilisation of wasted and underutilised labour. For every economically inactive dependency removed the number and 'burden' obviously falls - and the mobilisation of goods/services delivery rises. Persistently raising retirement age is not the answer, neither is putting the financial burden onto individuals whose contributions will differ. You reduce enforced idle labour (unemployed, underemployed). The issue isn't a financial one, but a real resources one, mobilising them and putting them where needed - as was the complaint of 'Steve' elsewhere on this forum, looking for employees and willing to pay for them. Government's capacity in this regard is vastly greater.
 
The people robotically reiterating the 'tax funding' fallacy are so pig-headed that they deserve to have dwindling public services until they get it into their heads it is a fiction. Unfortunately a lot of other people with less control over this will also suffer.

Shame on you for being wilfully ignorant.
 
Le Baron said:
The people robotically reiterating the 'tax funding' fallacy are so pig-headed that they deserve to have dwindling public services until they get it into their heads it is a fiction. Unfortunately a lot of other people with less control over this will also suffer.

Shame on you for being wilfully ignorant.
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I quite understand the Beardsley Ruml, Abba Lerner/Functional Finance tradition. I've edited my quote of Ponty above, accordingly. I'll be more careful in future.
 
Ponty said:
Thing is, these numbers are just colossal. IIRC, you need to earn circa £50K a year to be a net financial contributor in UK. Below that and someone else is funding you on a macro level. I know we could spend months arguing about that figure but just accept it for a moment. If you earn £50K a year, you pay £12,350 a year in tax and NI. A year in Bob’s Cheshire care home is nearly 7 years of tax and NI contributions of a £50K salary. Let alone all the other public services which need to be paid for. I just can’t see how we can square the circle. Sure, go after tax dodgers but it’ll be a rounding error in the scale and size of the problem.
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PhilofCas said:


Meaning what, us plebs earning less than £50k are scroungers?
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Ponty said:
Completely missing the point and scale of the issue.
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Your post came across as saying that if people haven’t earned enough then they don’t deserve/qualify for looking after.
 
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